Popes Comments On Outsourcing Racially Motivated?
Pope Benedict XVI in his latest encyclical (letter sent from the Pope to all Roman Catholic Bishops throughout the world) named “Caritas in Veritate” or “Charity in Truth” has made some controversial statements about outsourcing. In Chapter 3 (Section 40) the Pope indicates that “outsourcing of production can weaken the
company’s sense of responsibility towards the stakeholders – namely the workers, the suppliers, the consumers, the natural environment and broader society – in favor of the shareholders, who are not tied to a specific geographical area and who therefore enjoy extraordinary mobility”. He goes on to add “there is no reason to deny that a certain amount of capital can do good, if invested abroad rather than at home. Yet the requirements of justice must be safeguarded, with due consideration for the way in which the capital was generated and the harm to individuals that will result if it is not used where it was produced”.
Outsourcing is a complex issue. When people in the West complain about outsourcing it is always in the context of jobs or other resources moving from rich countries to poor countries. Very few Americans for example complain about jobs moving from their country to Canada or from the richer parts of their country (like the North East) to poorer parts of the country (South or the North West) where laws are more business friendly and wages are lower. Most individuals who are at the receiving end of these complaints would agree that race plays a part.
The Pope is wrong when he talks about outsourcing favoring the shareholder and not the stakeholder. In this day of global publicly held companies the line between the shareholder and the stakeholder is blurry. The stakeholder in one company is a shareholder in another. A vast majority of the shares in publicly held companies are held by the stakeholders by directly owning stocks or through retirement funds or other financial instruments. So when the shareholder (we the public) make bad decisions (through the board and the executive officers who represent us) then the stakeholders (we the public again) suffer. This happens whether the company in question out sources or not. The Catholic Church benefits greatly from outsourcing. The church is having a hard time finding qualified candidates at the local level because of dwindling following. It is increasingly dependent on qualified candidates from poor countries to work as priests and nuns in the West.
The Pope is also indicating that most of the capital should be spent where it is produced and not abroad. So where is the growth going to come from for a business if it is not willing to invest in future markets? How can you make the correlation that capital and production are always at the same location? Are all BMW’s sold in Germany? Why would an Indian or Chinese buy European or American products if these American or European companies do not want to invest in India or China? Most of the followers of the Catholic faith live in poor countries. If production and capital should be at the same location shouldn’t the Vatican be in South America or the Philippines?
Most of the Popes opinions on business, capital and labor are outdated. Millions of individuals all over the world have come out of poverty in the last 20 years largely as a result of their economies opening up to foreign investment. Many of the economic problems facing the West today are not due to outsourcing or free capital movement. It is largely due to unethical business practices, lack of oversight and greed on behalf of the stakeholders and shareholders.
The encyclical also talks a lot about truth and charity in general and moral responsibility of businesses. In its thousand year history of the church all the Popes have been white Europeans. What about the Vatican’s moral responsibility? Are they practicing what they are preaching?
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Category: Culture & Religion